SASKATOON – Canadian hog producers won a small victory in their seemingly constant trade battles with the United States, but a bigger test awaits them in the next several months.
A binational trade panel ruled last week that for the year 1990-91, the American government cannot charge a countervail duty on Canadian sows and boars exported into the U.S. market.
Although it is a small part of the Canadian hog trade, it means that a cloud of uncertainty has been lifted from producers and exports of hogs and boars.
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Catherine Scovil of the Canadian Pork Council said had the ruling gone against Canada, it could have resulted in an $800,000 retroactive assessment by the U.S. commerce department. Close to $500,000 of that would have fallen on Manitoba exporters who assemble and ship 60 percent of the boars and sows sent south.
Scovil said the ruling should be a message to American regulators that duties should not apply in future to boars and sows.
“We hope the ruling sends a message to (the department of) commerce,” she said. “Of course, there is no guarantee of that.”
Lengthy procedure
Annually, U.S. commerce department officials conduct an administrative review of what they consider to be unfair Canadian subsidies on exported hogs. A countervail duty is applied once a judgment is reached that subsidies give Canadian exporters an unfair advantage. The judgment is often three or four years after the fact.
Exporters of most hogs must make a deposit with the American government to be used later if a ruling goes against them.
Separate calculations
The Americans tried to include boars and hogs in the overall calculations for 1990-91 but Canadian exporters said they should have a separate calculation because they do not benefit from the same overall supports that the hog industry receives.
The binational panel agreed with the Canadians.
Meanwhile, the Canadian hog industry awaits a U.S. commerce decision with much broader implications.
U.S. officials have indicated they hope to announce within two months a decision on overall Canadian hog industry subsidy levels for the years 1991-92 and 1992-93.
It could include the first indication of the American attitude toward such Canadian whole farm income stabilization support programs as the net income stabilization account.
Canada has been moving toward whole farm support programs, in part because it assumes they will be less subject to international trade sanctions.
If the Americans decide otherwise and the decision sticks, it could force the hog industry to reassess whether, like the beef industry, it should opt out of income supports.
Access to the American market is crucial to hog exporters. An American ruling that NISA is subject to countervail could be appealed to a binational trade dispute panel.
“We’re going to be watching this ruling very closely,” said Scovil. “If the ruling is against us, I think you could see the federal government and the industry consider some action.”
